In commercial transactions, the sale amount, also known as the gross revenue, is determined by the sale price minus any rebates, discounts, refunds or other reductions in earnings resulting from the sale. The purchase amount, also known as the cost of revenue, consists of the cost of services that are provided or the cost of goods that are traded. The margin is calculated by subtracting the cost of revenue from the revenue. Obtaining a satisfactory margin is a basic requirement for legitimate free-market commerce and a requirement for keeping a business in operation.
In the staffing industry, calculating the margin is a complex process because the revenue and the cost of revenue depends on many parameters in addition to the bill rate and the pay rate. Some methods in the prior art utilize simplified calculations that typically omit important parameters, resulting in inaccurate calculations. Other methods in the prior art utilize cross reference tables, which assist in looking up a margin based on various values of input parameters.
The methods in the prior art typically require a company to embark on an extensive training program to educate its sales force on how to perform the calculations. However, the inaccurate calculations, and extensive manual data entry make these systems cumbersome and frequently ineffective. This is especially true for businesses operating at or near the margin, which is frequently the case in competitive markets.